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May 27

by mydeposits
New Transparency Regulations Come Into Effect For Letting Agents

A new regulation has made it a legal requirement for all letting agents to ensure that their fees are transparent to both existing and potential customers. Forming part of the Consumer Protection Act 2015, it is one of three new transparency regulations that have been introduced today (27th May 2015).

Sean Hooker, head of redress at the Property Redress Scheme commented that agents’ fees “… should be clear and specific without surcharges or hidden costs.” Although the level of fee charged can still be determined by the agent “generic terms such as ‘administration fee’ are no longer acceptable and all charges should be displayed inclusive of tax.”

As well as transparent letting fees, letting agents must also display which government-approved redress scheme they belong to. Redress schemes, which became a mandatory requirement in October last year allows tenants and landlords to raise a complaint against their letting agent if they’re unsatisfied with the way their complaint has been handled. Agents must also make it clear to customers as to whether they have joined a Client Money Protection scheme or not.

Here’s a breakdown of the three changes introduced today.

Transparent letting fees

A comprehensive list of all fees, charges or penalties which are payable by the landlord or tenant before, during or after the tenancy must be prominently displayed in the letting agency. The list should be displayed where the letting agent comes face-to-face with an existing or new customer and the customer shouldn’t have to ask to see the list; it should already be clearly visible. If the agency has a website, then the list of fees should also be published here.

Government approved redress scheme

Letting agents must be registered with one of the three government-approved redress schemes; The Property Redress Scheme, The Property Ombudsman, or the Ombudsman Services: Property. It should be made clear which scheme they are a member of by using a window sticker and displaying the redress scheme logo on their website.

Client Money Protection (CMP)

Letting Agents must also make it clear to their customers whether they are part of a CMP scheme or not. By not disclosing their position they are in breach of the legislation.

The Act will be enforced by Trading Standards and any noncompliance from the agent could incur a fine of up to £5000. Mr Hooker stressed that “lower penalties will only being applied in extenuating circumstance which will not include ‘I did not know about the law’ or ‘I did not know what to do,’”

Comprehensive guidance on the new requirements has been issued by the Department for Communities and Local Government, and a breakdown of the three transparency rules are available on the PRS website.

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